This new technique is changing how publishers sell ads

Header bidding — also known as tagless, advanced, or pre-bidding — has gained significant traction among publishers over the past year with its promise to cut back on inefficiencies in programmatic by maximizing publisher yield and increasing ad revenue. Today, nearly 70% of publishers have adopted the new tech, up from almost no publishers two years ago.

In a new report from BI Intelligence, we explain how header bidding works with graphics that illustrate the process. We also take a look at how publishers benefit from integrating third-party header code on their webpages and explain how it can be advantageous for buyers when real-time bidding (RTB) technology takes place first — and not last — in the auction. We discuss some of the hurdles that prevent sellers from adopting header bidding, including technical implementation and latency issues, and lay out how header wrappers aim to alleviate some of these pain points. Finally, we take a look at how widespread adoption of header bidding could impact the future of guaranteed buys and ad networks.

Here are some key takeaways from the report:

Publishers are rapidly adopting header bidding technology. Nearly 70% of publishers now use header bidding technology, according to Tom Shields, SVP of publisher strategy at AppNexus. This is up from a negligible number two years ago.

The technology offers many benefits for publishers and advertisers. For publishers, header bidding offers a means to optimize yield, cut down on passbacks, increase transparency of inventory value, and eliminate Google's favoritism for its own ad exchange, AdX. On the buy side, advertisers are given the opportunity to bid on all available inventory and not just remnant inventory like in a waterfall system.

But header bidding requires advanced technical implementation and could lead to increased latency issues. To make up for this, many header code providers are creating header wrappers that cut back on operational hurdles when publishers use multiple header providers and offer timeout settings to ease latency problems.

In full, the report:

Defines header bidding.

Illustrates the header bidding process.

Compares header bidding to the traditional waterfall auction in programmatic.

Details the advantages that header bidding gives both buyers and sellers.

Explains some of the hurdles that publishers have to address when implementing a header bidding strategy.

Poses questions on the long-term effects of header bidding on the programmatic ecosystem.

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